EPA’s Clean Air Act Rules for Power

Plants, Industrial Boilers

and the Oil & Gas Industry

Institute of Clean Air Companies (ICAC)

Annual Meeting

Hilton Head Island, South Carolina

April 26, 2012

Overview

• Oil and Gas Standards – NESHAP

– NSPS

• Industrial Boiler MACT/CISWI – Major Comments on Reconsideration Proposal

• Cross-State Air Pollution Rule (CSAPR) – Status Update

• Proposed Carbon Pollution Standard (CPS) for New Power Plants

• Mercury and Air Toxics Standards (MATS)

2

3 Source: Adapted from American Gas Association and EPA Natural Gas STAR Program

Crude Oil to Refineries

(not covered by these

rules)

Production & Processing 1. Drilling and Well Completion

2. Producing Wells

3. Gathering Lines

4. Gathering and Boosting Stations

5. Gas Processing Plant

3

1

2

4

5

6

7

8

10a

10b

10c

10d

9

Natural Gas

Transmission & Storage 6. Transmission Compressor Stations

7. Transmission Pipeline

8. Underground Storage

Distribution (not covered by these rules) 9. Distribution Mains

10.Regulators and Meters for:

a. City Gate

b. Large Volume Customers

c. Residential Customers

d. Commercial Customer

Natural gas systems encompass wells, gas gathering and processing facilities, storage,

and transmission and distribution pipelines.

The Natural Gas Production Industry

• Final rules issued on April 17, 2012.

• Will require companies to capture natural gas that escapes when hydraulically

fractured gas wells are prepared for production -- gas that currently is going to

waste in many areas.

• Rules are cost-effective -- projected revenues from recovered natural gas are

expected to offset costs, yielding a cost savings of $11 million to $19 million in

2015.

• Provide flexibility while maintaining environmental benefits.

– Phase-in period to ensure that equipment to capture natural gas is available in time

to meet compliance deadlines.

– Sets key requirements based on performance rather than on a specific technology.

• Includes incentives for industry to modernize equipment and reduce pollution

early.

• Will reduce emissions of smog-forming volatile organic compounds (VOCs) and

air toxics.

– Also yield co-benefits by reducing methane from natural gas wells. Methane is a

potent greenhouse gas – more than 20 times as potent as carbon dioxide.

4

Highlights of Oil & Gas Standards

http://www.epa.gov/airquality/oilandgas

Highlights of Oil & Gas Standards (cont)

• Updates standards issued in 1985 and 1999.

• Continues growth in clean domestic energy production, while increasing environmental protection.

• Includes the review of four rules for the oil and natural gas industry – a new source performance standard for VOCs;

– a new source performance standard for SO2;

– an air toxics standard for oil and natural gas production;

– and an air toxics standard for natural gas transmission and storage.

• Relies on available, affordable technology already in use.

• Offsets the cost of pollution controls through the capture of emissions.

• Provides flexibility and transparency.

5

Example of Green Completion Equipment

(Source: Weatherford)

Industrial Boiler MACT

• Main themes raised during the public comment period on the Reconsideration Proposal. – Major Source Boiler MACT

• Achievability of carbon monoxide (CO) limits.

• Solid fuel subcategory (for mercury (Hg) and acid gases (HCl)).

• Combustor design-based particulate matter (PM) limits.

• Definition of “clean” gases that qualify for work practice standards.

– Area Source Boilers • Initial compliance date.

– CISWI Rule • Definition of contained gaseous material.

• Final rule to be issued Spring 2012.

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http://www.epa.gov/airquality/combustion/index.html

The Cross-State Air Pollution

Rule (CSAPR)

• Background

• Highlights of CSAPR

• Legal Challenges of Stay

• Recent Rulemaking

• Next Steps

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Air Quality in Any One Place Is

Affected by Sources in Many States

• Air pollution can travel hundreds of miles and cause

multiple health and environmental problems on regional

or national scales.

• This rule reduces air emissions contributing to fine particle

(PM2.5) and ozone nonattainment that often travel across

state lines:

– Sulfur dioxide (SO2) and nitrogen oxides (NOX) contribute to

PM2.5 transport.

– NOX contributes to ozone transport.

• Many areas are still violating the 1997 ozone and the 1997

and 2006 fine particulate health-based air quality standards.

• Attaining national ambient air quality standards will require

some combination of emission reductions from:

– Sources located in or near nonattainment areas (local pollution);

– Sources located further from the nonattainment area

(transported pollution); and

– Pollution emitted by power plants, cars, trucks, and other

industrial facilities.

8

Overview of CSAPR

• The Cross-State Air Pollution Rule (CSAPR) was signed on July 6, 2011 to

reduce emissions of SO2 and NOX from power plants in the eastern half of the

United States. – Final rule responded to court’s December 2008 remand of the Clean Air Interstate Rule (CAIR)

• CSAPR reduces fine particle and ozone air pollution, saving lives, preventing

illnesses, creating jobs and protecting communities.

• CSAPR levels the playing field by requiring under-controlled power plants to

make long-overdue investments in proven, readily-available pollution control

technologies already in place at many power plants.

• The costs are affordable, and greatly outweighed by the benefits.

• The rule puts in place a new framework to address pollution that affects air

quality in downwind states.

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CSAPR States

10

• CSAPR includes

separate

requirements for:

• Annual SO2

reductions

• Annual NOx

reductions

• Ozone-season

NOx reductions

Recent Rulemaking and Next Steps

• December 15, 2011: EPA finalized a supplemental rulemaking to require five additional

states – Iowa, Michigan, Missouri, Oklahoma and Wisconsin – to make summertime NOX

reductions under the CSAPR ozone-season control program.

– EPA concluded that these five states plus Kansas significantly contributed to nonattainment and/or

interference with maintenance of the 1997 ozone National Ambient Air Quality Standards (NAAQS)

in other states.

• December 30, 2011: The U.S. Court of Appeals for the D.C. Circuit stayed the CSAPR

pending resolution of litigation challenging it.

– The court order did not discuss the merits of the challenges.

– Pursuant to the court’s order, the Clean Air Interstate Rule (CAIR), which was to be replaced by

CSAPR as of January 1, 2012, is now in effect.

– EPA believes the CSAPR is legally sound and will continue defending it vigorously.

• February 7, 2012: EPA issued minor adjustments to CSAPR to account for updated

information the agency received.

– These adjustments provide flexibility to states by increasing budgets in 17 states and easing

near-term limits on market-based compliance options.

• For the duration of the stay the agency will not require compliance with the Supplemental

Rule and the Revisions and Direct Final Rules will not be in force.

11

Health Effect Annual Number of Cases Avoided

Premature mortality 34,000

Non-fatal heart attacks 15,000

Acute bronchitis 19,000

Aggravated asthma 400,000

Days when people miss work or school 1.8 million

* Impacts avoided due to improvements in PM2.5 and ozone air quality in 2014

Estimated Number of Adverse Health Effects Avoided under the Cross-State Air Pollution

Rule*

Health Benefits for Millions of

Americans

• EPA estimates the annual benefits from the rule range between $120-$280

billion (2007 $) in 2014. – Most of these benefits are public health-related.

– $4 billion are attributable to visibility improvements in areas such as national

parks and wilderness areas.

• Other non-monetized benefits include reductions in acidification of lakes,

streams and forests, eutrophication of estuaries and coastal waters.

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Further information on CSAPR

• For general information on the Cross State Air Pollution Rule: http://epa.gov/airtransport/ or http://epa.gov/airtransport/basic.html

• CSAPR Fact sheet available at: http://epa.gov/airtransport/pdfs/CSAPRFactsheet.pdf

• Updates on CSAPR and the continuing implementation of CAIR available at: http://epa.gov/airtransport/bulletins.html

13

Proposed Carbon Pollution Standard

for New Power Plants

• Background

• Highlights of Proposed Carbon Pollution Standard

• Next Steps

14

224 339

730

1,720

2,154

0

500

1,000

1,500

2,000

2,500

Com

merc

ial

Resid

ential

Industr

ial

Tra

nsport

ation

Ele

ctr

icity

Genera

tion

Tg

CO

2 E

q.

Electricity Generation is the Largest

Source of CO2 Emissions

15

INVENTORY OF U.S. GREENHOUSE GAS EMISSIONS AND SINKS: 1990-2009

(April 2011)

2009 CO2 Emissions by Sector

Highlights of Proposed

Carbon Pollution Standard

16

• On March 27, 2012 EPA proposed a carbon pollution standard

for new fossil fuel-fired power plants.

• Currently there are no national limits on the amount of carbon

pollution new power plants can emit.

• The proposed standard would ensure that new power plants use

modern technology to limit this harmful pollution.

• EPA’s proposed standard is flexible, achievable and can be met

by a variety of facilities using different fossil fuels, such as

natural gas and coal.

• Proposes output-based emission standard of 1,000 pounds of CO2 per megawatt-hour (lb CO2 /MWh gross).

• Applies to new: • Fossil fuel-fired boilers, • Integrated Gasification Combined Cycle (IGCC) units, and • Natural Gas Combined Cycle (NGCC) units.

• New combined cycle natural gas power plants could meet the standard without add-on controls.

• New coal or petroleum coke power plants would need to incorporate carbon capture and storage technology (CCS). • The proposal includes an alternative 30-year compliance period to allow these

new plants to incorporate CCS at a later date to reach compliance.

• EPA is proposing that transitional sources will not be covered by this standard, provided they begin construction within 1 year of the proposal’s publication.

• EPA is not proposing a standard for modified units or for reconstructions.

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Highlights of Proposed

Carbon Pollution Standard (cont)

Next Steps – Public Comment

• The proposed rule published in the Federal Register

on April 13, 2012.

• The 60-day public comment period is open until June

12, 2012.

• EPA also plans to hold public hearings on this

proposal. The dates, times and locations of the public

hearings will be available soon.

– They will be published in the Federal Register and also listed

on http://www.epa.gov/carbonpollutionstandard

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The Mercury and Air Toxics Standard (MATS)

• Background

• Highlights of MATS

• Major Changes Since Proposal

• Costs and Benefits

• Compliance/Grid Reliability

• Next Steps

19

Location of Coal and Oil

Power Plants

Source: National Electric Energy Data System (NEEDS 4.10 MATS) (EPA, December 2011) and EPA’s Information Collection Request (ICR) for New and

Existing Coal- And Oil-Fired Electric Utility Stream Generation Units (2010)

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~ 1,100 Coal-Fired Units

~ 300 Oil-Fired Units

Overview of Action

• On December 16, 2011 EPA finalized the Mercury and Air Toxics Standards, the first

national standards to reduce emissions of mercury and other toxic air pollutants from

new and existing coal- and oil-fired power plants.

• Published in the Federal Register on Thursday, February 16, 2012.

• Standards will reduce emissions of:

• Metals, including mercury (Hg), arsenic, chromium, and nickel.

• Acid gases, including hydrogen chloride (HCl) and hydrogen fluoride (HF).

• Particulate matter.

• Air toxic pollutants are linked to cancer, IQ loss, neurological damage, heart disease,

lung disease and premature death.

• Standards create uniform emissions-control requirements based on proven, currently

in-use technologies and processes.

• Emissions reductions will be made through a range of strategies, including the use of existing emission

controls, upgrades to existing emission controls, installation of new pollution controls, and fuel switching.

• EPA is actively engaging in outreach to stakeholders, including sources (i.e., rural

electric coops, public and investor owned utilities), states, tribes and permitting

authorities.

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Adjustments Since Proposal

• EPA used new information from the public comment process

to adjust some aspects of the rule; the approach and

methodology remain the same.

• As a result of additional data, changes include:

• Adjusted some emissions limits, including using filterable PM as a surrogate for the

metal toxics limit.

• Clarified subcategory definitions to ensure the right units were covered in each

category.

• Added subcategories for non-continental oil-fired units and limited use oil-fired units.

• Simplified and improved monitoring provisions for clarity, consistency and increased

flexibility (e.g., continuous monitoring or quarterly testing, except for Hg).

• Provided an alternative compliance option for sources that plan to comply by averaging

across multiple units.

• Expanded and clarified eligibility for additional time to avoid reliability concerns.

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MATS Health Benefits in Detail

• The value of the improvements to health alone total $37 billion to $90 billion each year for

those health benefits we were able to quantify.

• The estimated annual costs of this final rule are $9.6 billion, about a billion dollars less

than the proposed standards. This means that for every dollar spent to reduce this

pollution, we will get $3-$9 in health benefits.

• Each year the rule is fully implemented, the rule will prevent serious health effects,

including:

– 4,200 – 11,000 premature deaths

– 4,700 heart attacks

– 130,000 asthma attacks

– 540,000 missed work or “sick” days

• Avoiding “sick days” saves companies and families money. It is particularly important for

the millions of Americans whose jobs do not provide paid sick leave and who risk losing

their jobs if they miss work too often.

• The rule is also projected to annually prevent 5,700 hospital admissions and emergency

room visits; 2,800 cases of chronic bronchitis; and 3.2 million days when people must

restrict their activities each year.

Source: EPA Regulatory Impact Analysis 23

• Proven control technologies to reduce these emissions such as scrubbers, fabric filters

and activated carbon injection are widely available.

• Many units already use one or more of these technologies.

• As a result of this standard, some power plants will upgrade existing controls (especially

particulate matter controls like electrostatic precipitators).

• Power plants may also install new controls (such as fabric filters, dry sorbent injection or

activated carbon injection).

Retrofit pollution

control installations on

coal-fired capacity (by

technology) with the

base case and with the

final MATS, 2015

(measured in GW

capacity). Source:

Integrated Planning

Model run by EPA,

2011

FGD: flu gas desulfurization (scrubber)

DSI: dry sorbent injection

SCR: selective catalytic reduction

ACI: activated carbon injection

FF: fabric filter

Sources Can Achieve These

Standards

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Power Plant Equipment and PM, NOx,

and SO2 Controls

ESP or FF

Ash >2500 °F

Flue Gas

Coal & Air

Stack

SCR

APH

Wet

Scrubber

Fan Spray Dryer

Boiler

Control Extent of Use1 Pollutant Reduction Co-benefits

ESP ~ 270 GW (~78%

of boilers)

Up to 99+% of filterable PM More than 99+% capture of each of

the HAP metals except Se and Hg

FF ~ 42 GW (~18%

of boilers)

Up to 99.9+% of filterable PM More than 99+% capture of each of

the HAP metals except Se and Hg

SCR ~ 130 GW (~23%

of the boilers)

More than 90 % reduction of

NOx possible, especially with

LNB

Can oxidize mercury and enhance

capture in a wet scrubber

Wet

scrubber

~ 170 GW (~34%

of the boilers) *

State-of-the-art is 98+% SO2

removal

Effective removal of acid gases (e.g.,

HCl, HF, SeO2) - can remove oxidized

Hg

Spray dryer ~ 23 GW (~8% of

the boilers) *

State-of-the-art is 90+% SO2

removal

Effective removal of acid gases (e.g.,

HCl, HF, SeO2) - can remove oxidized

Hg

1 From the National Electric Energy Data System (NEEDS) database and the Integrated Planning Model (IPM)

used to support the final MATS regulation.

25

Power Plant Equipment and

Mercury Controls

Hg0, Hg+2, Hgp

ESP or FF

Ash +

Carbon

Hg0

>2500

°F

Flue Gas Coal &

Air

Stack

SCR

APH

Wet

Scrubber

Fan Spray

Dryer

Boiler Activated

Carbon

Injection Carbon Injection + FF

Control Extent of Use Pollutant Reduction Co-benefits

Carbon injection 63 GW (~ 20%

of capacity)2

> 90 % control of coal mercury

possible

Captured mercury is strongly bound to

the carbon

Carbon injection + FF

(TOXECON ™)

> 90 % control of coal mercury

possible

Separate removal of ash and AC avoids

ash contamination and preserves

beneficial use options

Wet scrubber ~ 170 GW > 90 % control of coal mercury

possible if the Hg is oxidized

Effective removal of acid gases (e.g.,

HCl, HF, SeO2) - can remove oxidized

Hg

Spray dryer ~ 23 GW > 90 % control of coal mercury

possible if the Hg is oxidized

Effective removal of acid gases (e.g.,

HCl, HF, SeO2) - can remove oxidized

Hg

2 Total commercial bookings from ICAC. Number of ACI systems 115.

26

HCl Control: Dry Sorbent Injection

(DSI)

ESP or FF

Ash +

Carbon

Hg0

>2500 °F

Flue Gas

Coal & Air

Stack

SCR

APH

Wet

Scrubber

Fan Spray

Dryer

Boiler Trona

Injection Trona Injection + FF

Control Extent of Use Pollutant Reduction Co-benefits

Trona injection Mostly used for

SO3 control;

some use for

SO2; limited

use for HCl

> 90 % control of HCl is

possible

Some control of other acid gases -

SO2, SeO2, SO3, and HF removal

Trona injection can improve the

performance of an ESP

NOTE: other sorbents have also been used – e.g., hydrated lime, sodium carbonate

27

Compliance Timeline

• Effective date of rule: April 16, 2012.

• Compliance dates

– Existing sources:

• CAA-mandated 3 years under CAA section 112(i)(3)(A): April 16, 2015.

• CAA-allowed additional year granted by permitting authority if necessary for the installation of controls under CAA section 112(i)(3)(B): April 16, 2016.

• Pursuant to CAA section 113(a), OECA may issue an Administrative Order to provide reliability-critical units up to one additional year to come into compliance, as noted in its December 16, 2011, policy memorandum.

– New sources: immediately upon startup or the effective date of this rule, whichever is later.

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Further Information on MATS

• For general information on Mercury and Air Toxics Standards: http://www.epa.gov/mats or http://www.epa.gov/mats/powerplants.html

• MATS Fact sheets and a copy of the rule available at: http://www.epa.gov/mats/actions.html

– Please note the rule is 210 pages long

• EPA is also providing a clear pathway for reliability critical units to obtain a schedule with up to an additional year to achieve compliance. This pathway is described in a separate enforcement policy document that can be found at http://cfpub.epa.gov/compliance/resources/policies/civil/erp/

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Summary

• All of these rules are “data driven” and based on the best possible data (e.g., section 114 information collection request, etc.) and scientific/engineering information available to the agency.

• These rules demonstrate the agency’s response to extensive public comment and stakeholder involvement throughout the regulatory process.

• These rules will: – result in tremendous public health benefits, worth many times their cost;

– require the industry to invest in commercially available, cost effective, proven technologies; and,

– provide jobs for Americans during a period of high unemployment, and create demand for products like cement, iron and steel, and others.

30

Thank you!

Robert J. Wayland, Ph.D.

Leader, Energy Strategies Group

Office of Air Quality Planning and Standards

(919) 541-1045

wayland.robertj@epa.gov

Questions?